Tim Cook defends Apple tax policy

Apple CEO Tim Cook on Tuesday vigorously defended his company on Capitol Hill against charges that the tech company stashes billions of dollars overseas to lower its U.S. tax bill.

In his first appearance before Congress, Cook told a Senate investigative committee that the company is a leading U.S. taxpayer that’s generated thousands of new jobs. And he countered that the U.S. Tax Code itself is faulty because it hamstrings “American corporations in relations to our foreign competitors.”

Still, the Apple chief, flanked by fellow company executives, seemed unlikely to win over the panel’s most skeptical leaders: Democratic Chairman Carl Levin and ranking Republican John McCain. Even before Cook began his testimony, lawmakers released a report that found Apple had established overseas entities to help it bypass some taxes while exploiting U.S. loopholes that shielded about $44 billion from U.S. levies.

“Just like millions around the world, I carry an iPhone in my pocket. The company’s engineers and designers have a well-earned reputation for creativity. What may not be so well-known is that Apple also has a highly developed tax avoidance system — a system through which it has amassed more than $100 billion in offshore cash in a tax haven,” said Levin, who sits at the helm of the Permanent Select Committee on Investigations.

The committee leaders, however, stopped short of calling any of Apple’s conduct illegal. One committee member, Sen. Rand Paul (R-Ky.), even went as far as to defend the company Tuesday while urging the subcommittee to “apologize” for “bullying” executives.

“If anyone should be on trial here, it should be Congress,” Paul stressed in pointing out serious problems with the U.S. Tax Code.

Still, Apple has drawn Washington scrutiny because the company maintains more than $100 billion in cash overseas. That money, if ever returned to the United States, would be subject to a 35 percent U.S. corporate tax — a big bill that’s deterred the broader tech industry from repatriating its foreign earnings.

Apple isn’t the only company with a complex international tax scheme seemingly designed to lower its multibillion dollar tax dues. Two other tech leaders — Microsoft and Hewlett-Packard — were the subjects of the same committee’s 2012 tax probe. Levin suggested earlier this week that additional similar investigations are forthcoming, but he declined to specify who might be in the cross hairs.